The strong correlation between gas and EUA prices switched from positive to negative this week. While the TTF front month reached its highest in 10 days on Thursday, trading well above €36/MWh, the carbon market is lingering around the €70 mark, its lowest level in a month.

“Interesting weakening of TTF and EUA correlation this week” observed Luyue Tan, carbon analyst at LSEG. The long-standing relation between the two markets broke following the outcome of the European Parliament election. 

On Monday morning, both commodities opened down, with gas prices hitting their three-week low with EUAs following the lead. However, while gas prices managed to recover and even show a significant increase, the carbon market looked indecisive with participants still digesting the election results. 

So far this week, the carbon price fluctuated between a high of €72,12 and a low of €69,28 resulting in one of the narrowest weekly ranges of just €2,89. This is well below the price swings recorded in the previous week when the EUAs traded in a range of €6,89.

From our point of view, carbon prices are likely to return to their long-term pattern of following gas development. We expect any day now to end their recent behavior of trading without any noticeable fluctuations considering that limited price swings mean fewer opportunities for speculators.